TSX-listed junior Avalon Advanced Materials has outlined a new preliminary economic assessment (PEA) for its Separation Rapids lithium project, which simplifies the Kenora, Ontario-based project to initially produce lithium mineral concentrates, with the potential for later expansion to produce battery materials lithium carbonate and lithium hydroxide.

The smaller scale development model “substantially” reduced capital expenditure (capex) requirements from the original model completed in September 2016, the company said in a news release, adding that the full updated PEA would be published online in the next few weeks.

The updated PEA uses a plant throughput rate of 475 000 t/y, compared with the 950 000 t/y rate used in the 2016 PEA. This will result in a 20-year operating life, based on the present known mineral resources, with production of 71 500 t/y of petalite concentrate and 11 800 t/y of lepidolite concentrate for 18.5 years.

From year six to 20, the project will start producing 100 000 t/y of feldspar. The upfront capex requirement is C$77.7-million, with a further C$13.7-million planned for the feldspar circuit.

The project is expected to generate an average of C$90-million a year in revenue and costs are estimated at C$60-million, resulting in a pretax net present value, at an 8% discount, of C$156-million and a pre-tax internal rate of return of 27.1%.